Inherited IRA 10-Year Rule: How RMDs Actually Work for Beneficiaries

If you inherited an IRA or 401(k) from someone who died in 2020 or later, the SECURE Act's 10-year rule likely applies to you, and it works differently depending on your relationship to the original owner and when they died. Most non-spouse beneficiaries must empty the account within 10 years. Some must also take a required distribution every year in the meantime; others do not have to touch it until the deadline. Getting the wrong branch can mean an unnecessary early withdrawal, or a missed distribution that triggers a real IRS penalty.

The Three Rules, and Which One Applies to You

The rule that applies depends on two questions: are you an eligible designated beneficiary, and if not, did the owner die before or after their required beginning date (generally April 1 of the year after they turned the RMD starting age)?

1. You are an eligible designated beneficiary. This category covers a surviving spouse, a minor child of the owner, a disabled individual, a chronically ill individual, or any other individual not more than 10 years younger than the owner. The 10-year rule does not apply to you at all. Instead, you take annual "stretch" distributions over your own life expectancy, indefinitely, similar to how the older pre-2020 rules worked for everyone.

2. You are not an eligible designated beneficiary, and the owner died on or after their required beginning date. You must take annual required minimum distributions in years 1 through 9, and fully empty the account by December 31 of year 10. This is the branch the IRS's July 2024 final regulations clarified: many practitioners had expected no annual requirement here, but the final rules confirmed annual RMDs are required.

3. You are not an eligible designated beneficiary, and the owner died before their required beginning date. No annual distributions are required in years 1 through 9. You only need to fully empty the account by December 31 of year 10, though you can take voluntary distributions any time before that.

How the Life Expectancy Factor Actually Works

When an annual distribution is required, the amount is your prior year-end account balance divided by a life expectancy factor from the IRS's Single Life Expectancy Table. The IRS does not have you look up a fresh factor every year. It looks up your factor once, using your age in the calendar year immediately following the owner's death, and every later year simply subtracts 1 from the prior year's factor.

For example, a beneficiary who is 65 in the year after the owner's death starts with a factor of 22.9. On a $600,000 balance, that is a first-year distribution of about $26,201. The next year, the factor is 21.9, not a fresh lookup for age 66, and the year after that it's 20.9. Run your own numbers, including your specific beneficiary category and the owner's death year, with the Inherited IRA RMD Calculator.

The Excise Tax for a Missed Distribution

Formula used: Excise tax = missed distribution amount x 25% (or x 10% if corrected within the correction window). Assumptions: This estimates a single missed year's shortfall in isolation; it does not track your actual account history or any reasonable-error waiver the IRS may grant. Source: IRC section 4974, as amended by SECURE 2.0. File Form 5329 to report a missed RMD.

Why the Temporary Relief No Longer Helps You

Between 2021 and 2024, the IRS issued a series of notices waiving the excise tax for beneficiaries who skipped annual RMDs under branch 2 above, while the annual-RMD question itself was still unsettled. That relief ended with the 2024 distribution year. The final regulations, effective for distribution years beginning in 2025, confirmed annual RMDs are required in that branch, and no further relief has been issued. If you paused annual distributions during the relief window and you are in branch 2, you need to resume for 2025 and 2026 or risk the excise tax on what you should have taken.

What This Guide Does Not Cover

• An estate or non-see-through trust beneficiary. These are not "designated beneficiaries" at all, and follow separate 5-year or owner's-remaining-life-expectancy rules depending on the owner's death timing.
• A surviving spouse's additional options. Spouses can roll the account into their own IRA, or remain a beneficiary and use an annually-recalculating life expectancy method instead of the non-recalculation method described above.
• A minor child's transition at the age of majority. A minor child is an eligible designated beneficiary only until they reach majority, at which point the 10-year rule begins.
• Owners who died before 2020. Older, pre-SECURE-Act stretch rules apply instead, and are not covered here.

Sources and Verification

Methodology

SwitchWize derived this guide directly from IRS Publication 590-B, the July 2024 final regulations (T.D. 10001), and IRC section 4974, not from secondary summaries. Specific facts, deadlines, and dollar figures change; confirm your situation with a tax advisor or the current IRS guidance before acting, especially if you believe you may have missed a required distribution.